Half of all UK businesses underinsured: Aviva

Jason Chambers, head of underwriting automation at Aviva, said that rising inflation is having a big impact on underinsurance. 

He commented: “Rising inflation and supply chain disruption are causing difficulties for everyone, and SMEs are no exception. In order to save money, they might be tempted to cut corners on their insurance, but that really is a false economy.

“We estimate that 50% of UK businesses are underinsured to some degree, potentially leaving them seriously out of pocket in the event of a claim and possibly jeopardising their ability to stay afloat.”

The Office of National Statistics had the consumer prices index rate at 10.7% for November, another high level after months of rises.

A third of businesses do not consider the impact of inflation when reviewing their insurance, according to a recent Aviva study. 

The same amount, 32% of small and medium-sized enterprises (SMEs) surveyed, also did not take supply chain issues into consideration.

The survey of 502 SMEs was conducted by YouGov in September 2022 for Aviva.

Tech help

Aviva is promoting a new technology to help brokers with this problem, the commercial intelligence tool. 

The CIT can spot underinsurance and gaps in cover with “sophisticated” modelling using both Aviva and third-party data. 

The use of CIT has, according to Aviva, resulted in an average increase of 78% of sums insured.

Chambers said of the technology: “We appreciate that calculating the correct level of insurance is not always straightforward, so we’re delighted to offer a helping hand through CIT.

“This uses the latest data to estimate the right amount of cover for customers, who will be eligible for a valuation survey at a preferential rate through our specialist partner Barrett Corp & Harrington.

“This is about giving customers a clean bill of health with regard to their insurance, letting them get on with running their business, safe in the knowledge that if the worst happens, they’ll be adequately covered.”

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